Three states legalized some form of online gambling within their borders in 2013
By Andy Vuong
The Denver Post
DENVER (AP) — Over the past two decades, as the Internet and technology boom altered how other brick-and-mortar businesses operated, the U.S. casino industry continued to generate virtually all of its gaming revenue offline.
That’s now changing state-by-state, and a domino effect is expected to soon take hold.
This year, three states legalized some form of online gambling within their borders, with New Jersey recently joining Nevada and Delaware to allow live Internet-based casinos.
Quietly, Colorado lawmakers and industry officials drafted legislation late last session to authorize Internet poker. Though that effort stalled, the industry says it will continue to explore the issue, with another push possible in 2014.
“This is something we are monitoring very closely,” said Troy Stremming, executive vice president of government relations for Pinnacle Entertainment, owner of Colorado’s largest casino, Ameristar Black Hawk.
“Internet gaming continues to evolve state-by-state, and through ever-changing technology,” Stremming said. “With respect to Colorado, when there is a piece of legislation to review, we can make decisions based on whether or not participation will be beneficial to the company.”
On the smartphone side, gambling giant MGM Resorts International last month released the first casino mobile app to offer real comps and rewards, such as free rooms and buffets, for gambling with play chips. The rewards are redeemable at 11 brick-and-mortar casinos in Las Vegas, such as Bellagio and the Mirage.
If there’s any question about the appetite for such games, look no further than the results of MGM’s app, called myVegas, since it appeared in the Google Play and Apple App stores.
“The mobile launch has exceeded everyone’s expectations. We’re in the millions of downloads now,” said Josh Swissman, vice president of corporate marketing for MGM. “Just a few weeks ago, it was the No. 1 casino application in the iTunes App store. It was the No. 8 overall game application. And we got it as high as No. 14 for all apps overall in the entire iTunes app ecosystem.”
Many of those downloads came from residents of Colorado, a significant feeder market for Las Vegas-based casinos. MGM has a joint marketing agreement with Ameristar Black Hawk, sending Colorado gamblers offers and rewards based on their player up the hill.
“It’s a big market for us,” said Swissman, though he didn’t have specific figures.
Developed by PlayStudios, the myVegas app combines traditional slot machine play with elements of social gaming that Zynga made popular on Facebook.
PlayStudios CEO Andrew Pascal said the app’s technology platform can easily convert to the technical standards required for real money gambling, but that’s not in the cards for the company.
Because it doesn’t accept real money bets, the myVegas game is played worldwide.
Online gambling in Nevada, New Jersey and Delaware is limited to players who are physically within the respective state’s borders.
Nevada has authorized Internet poker, while New Jersey and Delaware permit other online casino games such as slots.
Colorado is closely watching Nevada’s process.
“We had talked very late in last year’s session with some legislators who were interested in pursuing it,” said Lois Rice, executive director of the Colorado Gaming Association, an industry trade group. “We’re still exploring it.”
She said one of the challenges is that the industry is still unsure about Internet gambling’s impact on land-based revenue.
Adam Krejcik, managing director of digital and interactive gaming at Eilers Research, estimates that online poker in Colorado could generate $30.4 million to $37.8 million in annual revenue about three to five years after legislation has been enacted.
Krejcik’s forecast for Colorado’s online casino revenue, which covers poker as well as slots, blackjack and other games, is $112.5 million annually.
For reference, Colorado’s brick-and-mortar casinos generated adjusted gross proceeds — total bets minus payouts — of $761 million during the fiscal year that ended in June.
In Nevada, the two poker sites that are live aren’t doing as well as expected, in large part because of the smaller player pool, said Donnie Peters, editor in chief of PokerNews.com, which tracks the industry.
“These two websites haven’t necessarily gotten off to the roaring start that I think they thought they were going to, which has held other companies back from wanting to jump in,” Peters said.
The sites, Ultimate Poker and WSOP, are operated in conjunction with companies that have land-based casinos in Nevada. They’re each averaging fewer than 200 players per day.
Before the federal government cracked down on online poker more than two years ago and shuttered three popular offshore sites, the player pools on those sites covered millions of gamblers worldwide.
Black Hawk, Colorado’s largest gambling destination, commissioned a statewide poll this summer to gauge voter interest in expanding betting to the Internet.
“Our survey showed that the voters of the state did not have much appetite for online gambling,” said Black Hawk city manager Jack Lewis.
Rep. Kevin Priola, R-Adams County, said he was among a group of bipartisan lawmakers who took up the issue last session.
“My thought and some others’ thoughts were, let’s have Colorado as close to the starting line as we can possibly be because as soon as the gates open, I think there are only going to be a few states that are going to have enough scale to make it work,” Priola said.
Industry observers believe California will be the next state to permit Internet gambling. Federal lawmakers are considering a bill to authorize online poker nationwide.
In the meantime, Delaware and Nevada have already had discussions about linking up their player pools.
